Dec 2006 Financial News

Carib Cement pays out $140m in bad cement compensation

Dec 13, 2006

Caribbean Cement Company has so far paid out approximately $140 million in compensation to claimants resulting from the distribution of substandard cement to the construction industry earlier in the year, but some dissatisfied customers are still threatening to sue the company.

According to the Consumer Affairs Commission (CAC), at least three purchasers of substandard cement are contemplating redress through the courts.

In the meantime, Carib Cement managing director Anthony Haynes said that an initial $160 million set aside for compensation has been increased to a firm $260 million.

Haynes told the Business Observer that the Cement company was now at the end of the compensation process and had advised shareholders that the claims will amount to $260 million.

"We are at the end of the process. There are not many more investigations left to do," Haynes said.

Saying he was unable at this time to give the total number of cases, Haynes told the Business Observer that Carib Cement had agreed with the majority of the claims and that less than five per cent of the claimants challenged their compensation.

Some complaints were handled directly by Carib Cement with the balance going through the CAC. After the tainted cement was identified in the market in February, the Government mandated the CAC to represent affected consumers free of legal and professional charges.

Of the total number of cases to the end of October, 93 have been handled by the CAC with 38 resolved resulting in pay out of $15.5 million by Carib Cement through the CAC.

"We do not consider a case resolved until payment is made by the Cement company," CAC head Dolsie Allen told the Business Observer.

She confirmed that in most of the cases the complainants agreed with the assessment by Carib Cement but added that payments were not being made on a timely basis. "The compensations are in the ballpark of the assessment. But payment from Carib Cement has been slow," Allen said.

"We are in fact doing payments, but it has to be done on a structured basis," Lystra Sharpe, Carib Cement public relations manager, explained. "It's not a situation where we can make all the payments at one time."

Allen said that of the 93 cases reported to the Commission, only three might have to be resolved through the Courts.
Lorna Morris, a Portmore resident who had her $1.3 million claim in June reduced to $96,000, is one complainant who is headed for the Courts. In an Observer story late June, Morris said she refused the offer and instead took her case to the CAC.

The Cement Company has subsequently increased their offer to Morris to $323,330, saying that poor workmanship was partially the reason for a failing of the concrete used at her house.

But that position, however, does not concur with an independent engineer's report or the opinion of the CAC.

"This is one that we will have to take to the Courts," Allen told the Business Observer, adding that the Commission, based on information from engineers, was not in agreement with Carib Cement.

A report from engineers Hill Betty Limited, which did tests at Morris' house on behalf of CAC, concluded that the strength of the concrete in sections of the building was below the accepted level.

In Jamaica, there is not a general standard for the strength of concrete, but the average that is normally used is 3000 psi for load-bearing sections, Allen explained. In the engineer's report, all the sections tested fell below the accepted level.
Representatives of Hill Betty were unavailable for comment.

Source:
Patrick Foster
The Jamaica Observer
Wednesday, December 13, 2006


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